Saudi taps new oil areas in plan to preserve capacity

Khobar, July 2, 2013

Saudi Aramco plans to develop two less productive areas of major oilfields, industry sources said, as Riyadh takes care to maintain excess capacity for the long term, even while non-Opec oil supplies are on the rise.

The plan to increase capacity from Khurais and Shaybah by a total of 550,000 barrels per day (bpd) by 2017 will take the strain off Ghawar, the world's largest conventional oilfield, two sources familiar with the plans said.

Such projects are not intended to raise Saudi production capacity beyond the current stated 12.5 million bpd, Saudi oil officials have previously said.

After pumping its biggest fields at near record rates to make up for lost supplies from Libya and Iran over the last two years, the kingdom wants to focus on less productive fields to ease pressure on aging reservoirs to help keep their output robust.

"The targeted area includes the two fields south of Khurais, Abu Jiffan and Mazalij, which are smaller complex fields that have not produced much oil in past years," Sadad al-Husseini, a former top executive at Saudi Aramco, said.

"As for Shaybah field, they want to mainly raise production from the south where the reservoir is less productive and to gather large volumes of additional natural gas liquids, which are recovered from the associated gas."

By 2017, Saudi Aramco aims to boost capacity at Khurais by 300,000 bpd to 1.5 million bpd and at Shaybah by 250,000 bpd to 1 million bpd, the sources said.

The company could not immediately be reached for comment.

Saudi Arabia had planned in 2008 to increase production capacity to 15 million bpd but then put the plan on hold after the financial crisis.

A surge in North American unconventional oil over the last few years, meanwhile, has taken pressure off Riyadh. Officials now say there is no plan to expand beyond the kingdom's current capacity.

Aramco is still investing in new production projects, however, to increase its options and take pressure off big fields such as Ghawar and Abqaiq that have been the main source of wealth for the economy for decades.

Husseini said the expansion plans would require new oil and gas processing facilities and a dedicated pipeline to transport natural gas liquids from Shaybah.

Aramco completed a large capacity expansion plan in 2009-2010, which included the start-up of Khurais and the expansion of Shaybah to 750,000 bpd.